Mortgage Advisors: Everything You Need To Know

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Choosing a mortgage can be a daunting prospect, and bringing in a third party for advice can feel like an unnecessarily complicated step.

This guide has been created to ensure you understand what a mortgage advisor does and how they can help you. It is designed to put your mind at ease when considering consulting one. We wrote this with first-time buyers in mind, but it is relevant for anyone looking to buy a home.

After reading you will understand what mortgage advisors do, how they compare to dealing directly with lenders, and the tangible benefits of working with one.

This guide covers:

  • The definition of a mortgage advisor
  • Benefits of using an advisor
  • The credentials a mortgage advisor is required to have
  • The process an advisor will use to match you with the right mortgage
  • Information on when best to work with an advisor
  • Pros and cons of working with an advisor
  • Pros and cons of applying for a mortgage directly
  • How to find a mortgage advisor
  • Questions a mortgage advisor will ask you

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What exactly is a mortgage advisor?

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In the past you could speak to your bank manager about getting a mortgage, but this is less common nowadays.

A mortgage advisor is now the more familiar intermediary - or middleman - between a borrower and a lender.

  • The borrower is a person like you, or in the case of commercial mortgages, a business.
  • Lenders are traditionally banks and building societies.

A mortgage advisor is a qualified specialist whose responsibility is searching the mortgage market to find you the best and most suitable product for your circumstances. Legal checks and industry oversight by the Financial Services Authority mean that they are trustworthy; their training, qualifications and experience mean they are authoritative experts on the subject.

It’s worth remembering that the terms mortgage advisor and mortgage broker are often considered interchangeable. In this piece, we use the term mortgage advisor.

The benefits of using a mortgage advisor

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“What can a mortgage advisor do that I can’t?” is a question we often hear. This section of the guide explores the tangible benefits offered by their services.

They cut through the noise. Previous experience means an advisor will recognise which deals will not suit your needs, allowing these can be taken off the table early. They will also know where to look for the most suitable deals, not just which ones to avoid.

They help you to avoid common pitfalls. With lots of numbers and percentages floating around, a mortgage deal can very easily look competitive despite having expensive fees or conditions hidden away. An advisor will help you spot these, to give you a clear idea of costs.

They can save you money: Although you may have to pay fees or a commission to work with an advisor, this upfront cost is very likely to be smaller than the savings you could make by taking out a mortgage with more favourable terms than you would have found otherwise. People often baulk at the initial outlay associated with an advisor, so remember to bear in mind the longer term financial implications.

They lower your chance of rejection. Experience with many previous mortgage applications and a good understanding of what different lenders look for mean that an advisor can give you the best chance of succeeding. Applications can be rejected for frustratingly minor reasons, and a advisor will make sure these are addressed before submission.

They give you access to a broader swathe of the market. Some mortgage products and even entire lenders are only available if you work with an advisor. The opportunity to open yourself up to the widest range of deals should not be sniffed at.

You have legal recourse. An advisor has a duty of care enshrined in law to recommend a mortgage best suited to you. If their advice turns out to be flawed, you can claim compensation. This is much more difficult if you apply for a mortgage yourself and later find out it is too expensive.

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Why should you use a mortgage advisor?

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Here we take a closer look at the credentials of a professionally trained mortgage advisor, and how they contribute to their capabilities.

They are trustworthy. Oversight by the Financial Conduct Authority (FCA) means that mortgage advisors must give advice in your best interests, within legally defined parameters. These protections mean that cowboy practices are not found amongst mortgage advisors in the United Kingdom.

They must also provide documentation to outline the details and costs of their services, and to provide information on any mortgage products recommended. A Key Facts document will be given at the start of your conversation, outlining their services.

A Key Facts Illustration (KFI) will be given for each recommended product, outlining repayments and the overall cost of the mortgage across its whole term, upfront fees, interest rates, and terms for making overpayments.

If you are unsatisfied with the service of your mortgage advisor, you have the right to complain to the Financial Ombudsman.

They are authoritative. To become licensed, a mortgage advisor must pass the Certificate in Mortgage Advice and Practice (CeMAP), which is a qualification offered by The London Institute of Banking & Finance and meets the required standards for licensing set out by the FCA.

They are experts. A mortgage advisor has an in-depth knowledge of the market, the various lenders, and the types of products available.

To keep a competitive edge in the industry, they will be required to ensure their knowledge of the market and its products is up to date, meaning that a well-reviewed and regarded mortgage advisor will be able to supplement and build upon your knowledge and make recommendations suited to your circumstances.

What does a mortgage advisor do?

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In short an advisor can steer you in the direction of the best mortgage for you, and take the hassle out of the journey to get there. This section of the guide explains how they will do it.

At a very top level, their involvement will look like this:

As well as the products available, a mortgage advisor will also look at your circumstances and help you understand the costs and terms of any products they recommend. They will look at what you can demonstrably afford and give advice accordingly, with the logic that you will be able to comfortably afford repayments on recommended products for the duration of the mortgage.

In order to give tailored, comprehensive advice on mortgage products directly suited to your individual circumstances, an advisor will look to understand your situation and needs. With this information they can make the challenge of choosing the right mortgage that little bit easier.

They will have extensive conversation with you to establish what you are borrowing for, what your budget is, and how your circumstances - personal and professional - will affect your ability to borrow. This may seem gruelling at times, but remember they can be more useful when equipped with more information.

The questions a mortgage advisor will ask are outlined later on in this guide. (Read the questions you should be asking your mortgage advisor here.)

Your advisor will also be on hand to answer questions and clarify concepts throughout the process. Mortgages come with a lot of jargon and can be hard to navigate, so having someone knowledgeable to help out can be a real help.

Their existing relationships with lenders, and their extensive knowledge of the marketplace and trends, mean they can connect you with deals that are more relevant and suitable than those you might find for yourself.

These existing relationships can also lead to preferential rates and special deals that would not otherwise be available. For each mortgage you will be given information about fees, repayments and interest rates, as well as tips on how to boost your chance of acceptance.

An advisor’s vast experience in completing mortgage applications mean they can help you avoid common pitfalls in the application process. There's nothing worse then painstakingly filling out an application form, only to be rejected for a small, avoidable error.

Ideally, they will also complete the paperwork for you, meaning your application will be completed quickly.

When should you use a mortgage advisor?

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Short answer? As soon as possible!

Enlisting their help early on in the application process maximises their opportunities to help you, and allows you to reduce the risk of frustration, disappointment, and rejection while finding and applying for your mortgage.

Because an advisor helps you understand what you can afford, the information they give will ultimately dictate the price range of properties you can look to buy. If you have done extensive searching for a new home before speaking to an advisor there is every possibility that you may have overestimated what you can afford, rendering your choices unsuitable. This can be deeply demoralising and frustrating, not to mention a waste of time.

And it's not just house price that a mortgage advisor’s advice will affect. They will also give you a more comprehensive understanding of the other costs involved in the application process: things like mortgage account fees, arrangement fees, booking fees, legal fees, local authority fees, and more.

A better understanding of costs empowers you with more information to make sure your finances are in order.

So speaking to an advisor early in the process is recommended.

If you are already further along the process, ideally you would at least speak to a mortgage advisor before making an offer on a property. If you make an offer but later find out you can't afford to borrow enough, thanks to the advice given off the back of your conversation with an advisor, you frustrate the process for everyone else involved. While you are legally able to retract an offer before exchange of contracts, you risk holding things up for other people in the chain, or even collapsing it entirely.

Some people do all the research themselves and apply for a mortgage without the help of an advisor. Sometimes they succeed - it is possible, after all. Other times they are rejected for a mortgage deal and decide to involve an advisor at this late stage in the process to avoid further rejections.

Bank versus mortgage advisor: which is right for you?

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A mortgage advisor isn’t your only option, though. As we just mentioned, many people arrange their own mortgages without outside help. For the sake of transparency and completion, this section of the guide explores the alternatives to using an advisor.

Direct deals and advisor deals

A direct deal is a mortgage offered by a bank or building society, which is only available directly from them. Advisor deals are those available only to mortgage advisors.

Each has benefits and drawbacks.

Pros and cons of a direct deal

✔️ You will be exempt from mortgage advisor fees.

✔️ You may gain access to exclusive deals with better terms.

✔️ You may also receive preferential treatment if you have banked with this lender before, although this is not definite.

❌ You will have access to a relatively limited choice of products and deals.

❌ Your choices will be biased to the lender’s product.

❌ You will not have access to any advisor-only deals.

Other things to consider when looking for a direct deal.

Mortgage comparison sites may not list all direct deals: it’s worth heading into a branch and asking a member of staff.

Pros and cons of using a mortgage advisor

✔️ You have direct access to expertise based on experience and industry-recognised qualifications.

✔️ You will have access to a broader sample of the market.

✔️ You will have access to advisor-only deals.

✔️ Advice will be more impartial than from a lender with a vested interest in their own organisation’s products.

✔️ An advisor can help with paperwork, which is always a plus!

✔️ They are also more involved in moving the process forward by chasing and nudging others involved.

✔️ They can help with troubleshooting the process or appealing.

❌ You will most likely have to pay advisor fees.

❌ If you do not pay advisor fees they will take a commission based on the price of the property.

❌ You will not have access to any direct deals.

❌ An advisor is not obliged to tell you about direct deals you may be eligible for

Other things to consider when using a mortgage advisor

Make sure you understand whether your mortgage advisor is tiered, multi-tiered, or whole of market.

Finally, be aware that both are likely to cross sell other products (insurance etc) during the mortgage process. This is allowed, but the products are not compulsory and do not have to be purchased from the same provider.

In short, an advisor may represent higher initial expense, but one that can be outweighed by savings unlocked by their expertise throughout the process.

You’re protected with both

Direct lenders and mortgage advisors are both legally obliged to assess your circumstances and give advice that is suitable and relevant. Advice covers mortgages available, their terms, information about types of mortgage, and your likelihood of acceptance.

Summaries of any mortgages you’re interested in will be given in a Key Facts Illustration (KFI). This provides evidence that can be used to argue a case of a mortgage being mis-sold, if things go south in the future.

It is also worth remembering that both lenders and advisors are regulated by the Financial Conduct Authority (FCA), and answerable to the financial ombudsman.

How do I find a good mortgage advisor?

If you’ve decided to go for a mortgage advisor, here are some steps to take to make sure you find a good one!

Step 1: Look for an advisor with a good reputation. In the age of Google you can look online to see what previous customers are saying about them: look at reviews from Google and other providers like Feefo, as well as any testimonials on their website. The latter can be cherry-picked, but review platforms paint a more comprehensive picture.

A good mortgage advisor will have many glowing testimonials from people they have successfully helped to find the right mortgage. If you see lots of complaints and debate in the reviews, this could be a red flag.

Step 2: Look at the number of products they offer. A mortgage advisorcan be independent, meaning they will recommend deals from the whole of the market (with a couple of caveats). Those who are not independent represent specific lenders.

(The caveats we mentioned: some lenders don't deal with advisors, so an independent advisor cannot apply to them on your behalf. The advisor may still recommend a deal from such a lender, but you will have to apply by yourself).

A good mortgage advisor can be either, just make sure you understand the difference and implications. One may be a better fit than the other for your needs.

Step 3: Look at how much you will be charged for using their service. Aim to understand whether you will pay a flat fee or a percentage commission on the final deal, and whether the advisor will receive a commission from the lender on top of what you pay.

A good mortgage advisor is not necessarily cheap; rather they are good value for money. Paying a bit more for the right advisor can lead to savings of hundreds or thousands of pounds on eventual mortgage repayments, so don't baulk straight away at a number higher than you were expecting.

Step 4: Look at their qualifications. While all mortgage advisors must be qualified and registered with the Financial Conduct Authority (FCA), there are different qualifications available. The Certificate in Mortgage Advice and Practice (CeMAP) is accredited by the London Institute of Banking & Finance (LIBF), and is considered the UK's best mortgage advisor qualification.

Step 5: Go with your gut! There's a lot to be said for gut feeling, and early conversations with prospective mortgage advisors will count for a lot. If you feel reassured and comforted, maybe you've found a good match. If you feel belittled and concerned, perhaps look elsewhere.

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What questions will a mortgage advisor ask?

In 2014 the Mortgage Market Review was implemented. This was a wide scale examination of mortgage rules in the UK, and was designed to reduce the risk of another financial crisis.

As a result you will have to answer quite a few questions when applying for a mortgage, whether you use a mortgage advisor or go it alone. These questions are designed to find out if a mortgage is the right thing for you and, if so, to make sure you get one you can afford to repay.

Some lenders also require borrowers to demonstrate they could afford to make repayments if interest rates were to increase. These "stress tests" are designed to protect you as well as the lender, by ensuring everyone involved can afford to lend or borrow the money in question.

By asking a series of questions your advisor will build up an understanding of your financial situation, your spending habits, your position in life, and the type of property you would like to buy.

Here are some of the topics you'll have to answer questions on. You can expect the interview to take up to two hours: a slog, but a worthwhile one.

Your earnings

You will need to provide proof of this: Pay slips, P45s, and so on. If you're self employed you may also need to provide proof you will have income in the future, which can be tricky.

Expect questions like:

  • Do you plan to stay in your job?
  • Do you plan to become self employed?
  • Do you expect your income to change in the next two years?

Your spending habits

This includes day-to-day expenses as well as deeper questions about your ability to manage your money. When assessing debt, advisors look more closely at your monthly repayment amount than the overall amount you owe. Reliance on overdraft and loans may paint a picture of a borrower who is likely to struggle with repayments in the future, which could harm your ability to borrow a lot or even at all.

Expect questions like:

  • Do you gamble?
  • Are you often in your overdraft?
  • Have you ever used a payday loan?
  • How much do you spend on necessities like groceries / bills / commuting / clothing / grooming / health care / childcare?
  • How much do you spend on optional extras like gym memberships / media subscriptions / leisure travel / shopping / pets?
  • How much do you spend on vices like alcohol / cigarettes?

Your plans

An advisor will look to understand whether you are planning any expensive holidays, whether you are looking to have children, and various other indicators that your financial situation could change relatively drastically in the future.

Expect questions like:

  • Do you have children?
  • Are you planning to have children, or more children?
  • Are you planning any holidays around the application period?

These questions allow your advisor to build up an accurate image of you, your life, and your financial situation. The answers help them to connect you with the best mortgage deal for you, and help you to avoid a situation where you cannot afford to make your mortgage repayments.

The questions may be gruelling, but they are a small price to pay for peace of mind.

In conclusion...

A good mortgage advisor will demonstrate their worth time and time again through the mortgage application process, and will put your mind at rest.

Remember that an advisor is not compulsory, and that many people successfully apply for mortgages without their help. It is about weighing up the pros and cons, and deciding which route works best for you.

Professional qualifications and due diligence mean that there is a very low risk of a cowboy mortgage advisor. When you enter a professional relationship with an advisor, they will have your best interests at heart.

If you have any questions about mortgage advisors, or any other step of the house-buying process, get in touch with our team of experts. We’ll be happy to help.

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